The Board needs to improve the District's procurement process. District officials did not adopt a procurement policy as required by General Municipal Law (GML). The Board also did not seek competition when obtaining goods and services that are not required to be competitively bid in accordance with GML. The only procurement guidance was contained in the District bylaws, which simply state that the Director will determine the most economical method of maintenance when purchasing Library office and service equipment. As a result, District officials did not consistently use competitive methods to procure goods and services. In addition, the Board did not ensure disbursements from the discretionary fund were made in accordance with the bylaws. Finally, the Board appointed an independent contractor as Treasurer. While the Treasurer does not take an oath of office (a requirement for holding public office), we found no significant indication that this is an independent contractor relationship.

The Board and District officials have appropriated a significant amount of fund balance for the District's budget over the past few years. For example, over the past three fiscal years the Board appropriated $675,000, $525,000 and $376,626, respectively, in its adopted budgets. The Board has not adopted a fund balance policy establishing the level of unrestricted fund balance to maintain. As a result, the general fund balance has declined approximately $1.2 million, or 64 percent, over the past four years. Furthermore, the District has used general fund money to help subsidize the school lunch fund operations over the past several years and at the end of the 2013-14 fiscal year, the school lunch fund owed the general fund nearly $44,000, which is likely uncollectible. Lastly, the Board did not use $250,000 in the insurance reserve for authorized and intended purposes during our audit period and it has not included a provision in the 2014-15 budget to make a required repayment of about $35,000 to the repair reserve to replenish it after moneys were used for emergency expenditures.

We identified significant internal control weaknesses in the Court's financial operations. The Justices did not properly segregate the cash receipt duties and did not provide oversight for cash receipts. Consequently, we found that collections were not properly accounted for or deposited timely. In addition, accurate and complete bail records were not maintained and bank reconciliations and accountability analyses were not performed for all Court bank accounts. As a result, the Justices and clerks were unaware that, as of January 31, 2015, Justice Lamitie had a cash shortage of $4,273 and when he resigned, Justice Cositore had a cash shortage of $834. Furthermore, when Justice Cositore resigned, he did not file a final report with the JCF, close his official bank account or transfer pending bail to the other Justice or the succeeding Justice. We also found that the Justices did not establish policies and procedures for enforcing unresolved traffic tickets, which resulted in unpaid traffic tickets not being properly enforced along with potential lost revenue to the Town. In addition, the Town lacked comprehensive policies and procedures for preparing and processing payroll and maintaining leave time accruals for Highway Department employees and Town officials did not provide adequate oversight. We found that 12 of 14 Highway Department employees did not receive the correct gross pay, resulting in 11 employees being overpaid a combined total of $3,885 and one employee being underpaid $193. Furthermore, Highway Department employees' leave accrual records were also not accurately maintained, which contributed to the overpayments. In addition, as of January 31, 2015, we found five employees' sick leave balances were overstated by a total of 91.20 hours, valued at $1,756, and four employees' sick leave balances were understated by a total of 32.90 hours, valued at $645.

The Board did not receive adequate monthly financial reports or establish a sound budget process.

The Board has not established procedures for the Library's collection and disbursement of donated funds, or for cash receipts collected at the circulation desk. The Treasurer has not maintained adequate records for the money received from donations and fundraising activities. In addition, the Treasurer wrote checks disbursing these funds without Board approval or sufficient documentation to demonstrate it was used for Library purposes. We also found that the Librarian did not properly account for fines and fees collected at the circulations desk and did not remit them timely to the Village.

The District is serving nutritious meals to its students. However, the meals cost more to prepare than the revenue generated by the meal sales. In addition, the District's productivity level for meals per labor hour is below the industry averages. Although the industry averages may not be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity.

The Board did not establish policies and procedures to provide guidance to Village employees or implement sufficient controls over leave accruals and payroll timekeeping to ensure that the Superintendent's leave time was accurately accounted for. As a result, the Superintendent carried over unused leave time valued at approximately $57,000 as of November 28, 2014. Although Village officials discussed payroll and leave accrual procedures with employees, no comprehensive written payroll timekeeping and leave time accrual policies and procedures were in place to provide further guidance. The former Mayor told us that each pay period the Superintendent is required to complete a timesheet and accrue vacation and sick leave and use accrued vacation time during the calendar year, when possible. The Superintendent told us DPW employees are supposed to use the time clock to record their work hours. However, without a written policy, there is no formal guidance regarding the accrual and use of leave time or time clock use.

The Board did not properly manage the District's fund balance. The District's available fund balance has accumulated to more than 400 percent of the 2015 budgeted appropriations as of the end of 2014. Almost 89 percent of the District's $383,300 fund balance has been placed in 25 certificates of deposit accounts. While District officials told us these accounts were created to be used for future capital purposes, these funds have not been formally established as reserves. Therefore, these funds are available for funding operations. From 2012 to 2015 the Board budgeted to raise $91,300 in real property taxes for capital purposes.

While we commend the Board for contacting us with its concerns regarding the Project, we found that the Board should have known about most of the discrepancies detailed in the complaint (See Appendix A for our comments on the complaint). The Board did not provide adequate oversight of the planning and execution of the Project and did not ensure that the Co-Managers properly monitored the Project. The Board did not always provide clear, written expectations, such as the authority granted the appointed Project Co-Managers, or their monitoring and interim reporting requirements for the Project. As a result, the Board halted further work on the Project until it received clarification on the Project's status and costs. The construction phase of the Project was further delayed due to the redesign and requirements for landowner access, which resulted in increases in material and prevailing wage rates. In addition, the Board did not ensure that County contracts were properly approved, monitored and paid. Of 40 contracts, 11 did not have approval of both the Board and the County Attorney, and four contract renewals/amendments were not approved by either the Board or the Attorney. No procedures were taken to ensure the lowest possible cost was paid for 18 of 28 professional service contracts included, totaling $1.2 million. For the other 10 contracts totaling $6.3 million, although no quotes or requests for proposal (RFPs) were required per the County's procurement policy, County officials did use RFPs to seek the lowest possible cost.

The Board and District officials did not effectively manage the District's financial condition by ensuring budget estimates were reasonable. The Board did not adopt realistic budgets based on historical costs and trends. As a result, the District overestimated expenditures by a total of $33.5 million from July 1, 2011 through June 30, 2014. Additionally, the District consistently appropriated fund balance that was not needed to finance operations, in effect exceeded the statutory limit on unassigned fund balance. Finally, District officials used surplus funds each year to finance reserves instead of funding reserves through the annual budget process, which would have been more transparent to taxpayers. The Board made transfers into its reserves totaling about $10.6 million from unrestricted fund balance without sufficiently informing taxpayers of its intent to do so.

Generally, we found the Board provided adequate oversight of Library finances. However, the Board did not audit and approve claims from the private funds account prior to their payment. This increases the risk that errors or irregularities would not be detected and corrected.

The Justice generally ensures controls are in place to safeguard moneys. While the Justice has adequate controls for fines and fees collected by the Court and all moneys collected are properly accounted for, the Justice does not ensure the clerk is pursuing collections of unpaid traffic tickets. As a result, the Court has 17 unpaid tickets in our scope period that could represent $2,900 in uncollected fines and fees. In addition, although the Board performs an annual audit of the Justice's records, it could be enhanced by including a review of documentation such as case files and bail records in addition to the bank statements and the JCF reports that are already included in the audit.

The Board did not provide adequate oversight and management of the Town's financial operations within the townwide (TW) general fund. The Board placed a combined total of $579,200 into a building reserve during 2010 and 2011 that was not directly apparent to taxpayers. Also, Town officials have not developed policies and procedures to govern budgeting practices and the level of fund balance to maintain and have not communicated long-terms plans for the building reserve to taxpayers. The Supervisor did not provide the Board with monthly budget status reports, which contributed to the Board's underestimation of revenues and overestimation of expenditures in the TW general fund from fiscal years 2009 through 2013. These practices caused consistent positive budgetary variances totaling $670,000 for the five years reviewed. While these variances should have caused significant increases in unexpended surplus funds, the Town extensively funded the building reserve from fiscal years 2009 through 2011, which kept fund balance at reasonable levels. Further, the Board appropriated more fund balance than was actually available for 2013, 2014 and 2015, which led to fund balance deficits totaling $80,160 in 2012, $161,456 in 2013 and $136,153 in 2014. Town officials must now develop a plan to improve the Town's financial condition.

The townwide (TW) general and the (town-outside-village) TOV highway funds had operating deficits all four years totaling $45,200 and $127,400, respectively. The TW highway fund had operating deficits in three of the four years totaling $256,200, while the TOV general fund had an operating deficit in the 2014 year totaling $26,400. While these deficits were generally less than what was budgeted, they have led to declining fund balances within all of the funds. Specifically, the TW highway and TOV general funds ended 2014 with deficit fund balances of $26,900 and $2,100, respectively. Furthermore, the TW general and TOV highway fund balances are a small percentage of the next year's budget and, if the current revenue and expenditure trends continue, we project their fund balances will enter into deficits by fiscal year 2017. These deficit fund balances will ultimately impact the services the Town can provide. Although the Board members followed their procedures when developing budgets, including obtaining Department head “wish lists,” and discussing individual budget lines at budget workshops, they consistently adopted unrealistic budgets. Instead, they relied on one-time revenues to fund operations and used budget estimates that did not reflect historical trends. Additionally, the Board and Department heads were not monitoring and controlling the budget throughout the fiscal year.

The Board and District officials did not ensure that unexpended surplus funds were reasonable for the five-year period ending June 30, 2014. District officials planned to use a total of $17 million of fund balance during this period to finance District operations, an average of $3.4 million each year. However, they only used $2.4 million of the appropriated fund balance, or 14 percent of the total amount appropriated. In addition, the District overstated encumbrances by more than $6.5 million between the 2009-10 and 2013-14 fiscal years. As a result, the unexpended surplus fund balance exceeded the statutory maximum of 4 percent of the ensuing year's budget for each of the five years. In addition, although the District has a cellular telephone (cell phone) policy, officials do not have proper procedures in place to effectively manage cell phone use and acquisition. The District purchased cell service, cell phones and accessories totaling $45,877 during the audit period. We reviewed five payments totaling $28,741 and found that the District paid additional charges and fees of $3,277. Because the Board is not ensuring that officials adhere to the policy in place, the District incurred additional and unnecessary costs.

Because the Library's purchasing policy does not address procurements that are not subject to bidding laws, Library officials did not always seek competition when procuring goods and services. While the use of competition for such procurements is not legally required, the law does require a policy to be established; and best practices indicate that the use of competition helps ensure the most prudent use of taxpayer moneys. We found that Library officials paid a professional service provider and an insurance broker a total of $90,912 without soliciting competition. Further, Library officials did not solicit competitive bids when procuring services costing $134,076; and did not solicit competition when procuring goods and services from 10 vendors who were paid a total of $28,551. As a result, Library officials and taxpayers have limited assurance they obtained goods and services at the most reasonable cost.

The Board allowed budget line items to be routinely over-expended and budget transfers to be made after the end of the fiscal year, rather than throughout the year when needed. In addition, the Board did not properly audit all individual claims; we found instances of “confirming” purchase orders prepared after items were already purchased, claim vouchers approved by department heads after checks had been prepared, and a payment to a professional service provider without adequate documentation to support the claim. In addition, while the Court clerk does maintain up-to-date accounting records, the Justices and Village officials did not establish proper controls to ensure the Court clerk properly accounted for all issued parking tickets. For example, no one reconciled the issued tickets that the Court received from the Police Department with the entries recorded in the Court's financial software, resulting in eight tickets being unaccounted for with no supporting documentation. Further, the Justices did not provide adequate oversight of the Clerk's responsibilities, which were not adequately segregated. While the Justices review, sign and date the monthly bank reconciliations and reports prepared by the Court clerk, these functions alone do not adequately address the control weaknesses in the collection and recording of parking ticket fines. Furthermore, accountability for recording the Court collections is compromised because the Court clerk and assistant Court clerk share a username to access the Court's financial management software.

We found no material discrepancies with the accounting for moneys received by the Court or the accuracy of bank deposits. However, the Justices did not ensure that accurate monthly bank account reconciliations were being performed by the clerk, which should be part of their month-end accountability analysis. Furthermore, we found 20 cases were not properly closed out in the Court's computerized accounting system and the clerk could not locate 21 pending case files to allow us to determine whether the case files agreed with the Court's accounting system. Additionally, the Justices did not deposit all collections in a timely manner.

We found that the Committee could improve its oversight of the Company's financial activities. Although the Committee has adopted Company bylaws, which include cash disbursement policies, we found them to be inadequate. Even though the Company's bylaws specifically detail the audit committee's responsibilities and the Treasurer's duties, these guidelines did not adequately segregate or provide oversight of the Treasurer's duties. The Treasurer controls all aspects of the cash receipts and disbursements processes without any oversight or mitigating controls, such as independent review of his work. At each monthly meeting, the Treasurer provides a balance sheet listing the cash balance for three of the Company's bank accounts, check registers and cash receipt journals, where necessary, to the Committee and membership. Even though the Treasurer provides these financial reports at the monthly meetings, he informed us that no one discusses these reports during the meetings. Further, the President did not appoint a three-member audit committee to review the Treasurer's work during our audit period. In addition, the Committee has not adopted policies or procedures for financial operations such as conducting fundraising activities, purchasing goods and services, and processing claims.

The Board did not establish and maintain an environment committed to accountability, competence and transparency due to its lack of policies, guidelines and monitoring. The Board didn't ensure that the Secretary included sufficient detail in the Board's meeting minutes, did not comply with Town Law relating to Commissioner elections and did not properly document relevant payroll information. In addition, the Board-adopted policies related to food purchases and travel were not comprehensive and not adhered to by District employees and officials. The District also has no policy regarding credit card usage. The District paid 665 non-payroll expenditures totaling $1.3 million during the audit period. We reviewed 177 food, travel and credit card expenditures totaling $86,337 and found that the Board did not ensure that these expenditures were adequately supported and valid prior to approving them for payment.